ICRIER Suggests Flexibility in Ethanol Blending Target Amid Growing Demand

The Indian government has received a new suggestion from the ICRIER research paper titled 'Food versus Fuel: Rebalancing India's Ethanol Blending Strategy'. The paper, co-authored by agricultural economist Ashok Gulati, recommends keeping E20 as the long-term target for ethanol blending but allowing a temporary return to E15 if domestic ethanol availability falls or the economic cost of maintaining E20 rises sharply. This flexibility would reduce pressure on the ethanol blending programme during temporary agricultural supply shocks.

The paper highlights the widening gap between rising ethanol demand and the availability of key agricultural feedstocks, such as corn, sugarcane, and rice. Ethanol supplied to oil marketing companies has risen from 173.03 crore litres in ESY 2019-20 to an estimated 1,200 crore litres in ESY 2025-26, representing a CAGR of around 38%. Feedstock production, however, has grown at a much slower pace.

The researchers suggest increasing the share of corn in ethanol production as productivity and availability improve. Rice from FCI stocks should mainly be used when there is a genuine surplus, and its price should reflect at least the acquisition cost. They also recommend using sugar imports as a short-term safety measure during shortages and making ethanol and feedstock imports more flexible.